Surrendering a Tenancy Agreement by Mutual Consent

There are two main ways to end a tenancy. The landlord or the tenant can serve notice, ending the tenancy according to the rules laid out in the contract. Alternatively, both the landlord and the tenant can agree to end the tenancy by mutual agreement.

In the first situation, the rules of the contract must be followed closely because only one party wants to end the tenancy, and the rules of the tenancy agreement are there to ensure this happens fairly and smoothly.

In the second, because both parties are happy to proceed according to new, agreed terms, the tenancy-ending mechanisms in the contract (e.g. how much notice to give) don’t have to be followed. This is called a surrender of tenancy.

Most tenancies end with the surrender of the contract by mutual consent. This guide explains how to surrender a tenancy and how to end a tenancy early via a deed of surrender.

Quick Overview

There are two types of tenancy surrender: express and implied.

Express surrender is when the landlord and tenant agree in writing (via a deed) to end the tenancy.

Implied surrender is the mechanism by which tenancies are legally ended when the tenant appears to have abandoned the property and stopped paying rent.

Both require the agreement of both parties: either through a written agreement (express) or through the implication of actions (implied).

Surrendering a Tenancy Agreement by Mutual Consent

Reasons for a mutual surrender could include:

The tenant has a change of circumstances and now wishes to end the tenancy agreement early (i.e. move out before the end of the fixed term).

The landlord needs the property before the end of the fixed term for unforeseen reasons.

The tenancy has turned periodic but the parties would prefer not to end the tenancy on the final day of a rental period.

In this case, the parties will need to reach a separate agreement, and this needs to be agreed by both parties rather than one party simply serving notice on the other.

Express or Implied Surrender?

A surrender can take one of two forms: ‘express’ or ‘implied’ surrender. Let’s look at both of those in turn.

Express Surrender

An express surrender is when the terms of the ending of the tenancy are agreed by both parties in writing in a deed.

It is strongly advisable to surrender the tenancy in writing because surrenders without a written agreement (implied surrenders) are a lot messier and more complicated.

In particular, as will be explained below, a landlord needs to make it clear under what conditions they are taking back the keys. For example, if a landlord relet their property to a new set of tenants after a short void period and then went back to the original tenants to pursue them for losses caused by the void period, they would risk the original tenancy being judged to have ended by operation of law when they relet the property.

In addition, if a landlord does not ensure the situation is clear, they could be deemed to be illegally evicting the tenant.

For example, the tenant might give back the keys to the landlord without making clear that the tenancy was now over; if the landlord changed the locks and the tenant then came back and wanted access to the property, the landlord could be seen as illegally excluding the tenant from the property.

Again, the underlying issue here would be that the parties’ actions did not unequivocally prove that the tenancy was over. Having a well written deed of surrender should help landlords avoid all such problems.

What to Include in a Written Express Surrender of Tenancy

To be as complete as possible, any tenancy surrender should include the following:

Basic details

The address of the property.

The names and addresses of all the parties involved.

Terms

The date that the agreement will end.

The terms under which the agreement ends.

In particular, whether any further payments are due from the tenants (such as further rent payments, money from the deposit, or a lump sum agreed to cover the landlord’s costs).

Whether any of the obligations under the tenancy remain, or whether they will be discharged in full once the document is signed.

Signatures

The signatures of all parties.

The date that the document was signed.

Under what conditions the document will be considered legally binding (e.g. only when signed and dated by all parties).

Tenancies of less than three years do not need to be created by deed, but this exclusion focuses on the creation rather than surrender of a lease; so the surrender of a tenancy is best made by deed, even if the tenancy itself was created by a different method.

In practice, agreeing the surrender in writing but not as a deed would normally give a clear indication of the parties’ intentions and make it considerably harder for the tenant to argue that their actions were compatible with the continuing existence of a tenancy.

However, given the technical requirements of the legislation, signing as a deed with witnesses is advisable where possible.

Implied surrender

This is the more complicated possibility. It should be avoided if possible.

What is an implied surrender?

Remember that a surrender is when both landlord and tenant agree to end the tenancy. A written agreement is clearly the best way to do this when possible. But legally, such an agreement can be implied from the behaviour of both parties, too.

An implied surrender is when the behaviour of both the landlord and tenant makes it clear that they both agree that the tenancy has ended. It is also known as ending the tenancy by ‘operation of law’.

Examples of implied surrender include:

The landlord and tenant signing a new contract for the same property under different terms, where the new terms are clearly intended to supercede the previous ones. This would end the old tenancy and start a new one.

The tenant gives back the keys to the landlord and the landlord accepts these, relets the property, begins entering the property without asking the tenants’ permission

As the agreement is not in writing, implied surrenders are often open to grey areas and disputes.

They are also a kind of backstop to prevent landlords being ‘in limbo’ if a tenant suddenly abandons, the property never to be seen again. More on this below.

What counts as an implied surrender?

A landlord’s actions must clearly demonstrate that they believe the original tenancy is over.

Good examples of such behaviour are things that would be illegal if the tenancy was still in progress. For example, if the landlord began entering the property and using at their own home. Doing so would demonstrate their belief that the tenancy was over, since this behaviour would be illegal if a tenancy was in progress.

Examples of Actions that Don’t Imply Surrender

Court cases such as Padwick Properties Ltd v. Punji Lloyds Ltd (2016) and Artworld Financial Corporation v Safaryan and others (2009) have established some important points to help understand what is required for a tenancy to be considered ended.

Example 1: The landlord simply taking back the keys and re-advertising the property

This does not necessarily mean the tenancy is finished. If they simply took the keys for safekeeping, changed their mind about reletting after they began advertising, or were unable to find suitable tenants, their actions might not be incompatible with the continuation of the original tenancy. If so, ‘implied surrender’ would not have taken place.

Example 2: Inspecting the property or garden in a way compatible with the tenancy continuing need not imply surrender by operation of law.

This, too, does not necessarily mean the tenancy is over. Landlords are allowed to enter the property to make urgent emergency repairs, so this action could be compatible with an ongoing tenancy.

The principle here is a form of ‘estoppel’, that is, a common law concept which essentially prevents someone from making claims which directly contradict their previous words or actions.

Surrender When the Tenant Abandons Property

When a tenant simply vacates the property and stops longer paying rent, this is commonly known as ‘abandonment’ or ‘abandoning the property’.

This is unnerving for the landlord, since, if the tenant really has gone for good, the landlord wants to relet the property as quickly as possible. On the other hand, if the tenant has simply gone on holiday for 3 months without telling anyone or paying the rent, then if the landlord relets the property, they will be in a very messy situation when the tenant returns.

What to Do If You Suspect a Tenant Has Abandoned the Tenancy

The first thing to do if you suspect your property has been abandoned is try to contact the tenant. You need to make sure that the tenancy really has been abandoned permanently.

NB: If you act as though you have possession of the property before the tenancy has been legally terminated, then you will not be able to claim rent over the same period. For example, if you think the property is abandoned in June, so you move back into it in July, you will not be able to also pursue the tenant for July’s rent.

Ways to End an Abandoned Tenancy

If contacting the tenant is not possible and you have good reason to suspect the tenancy is abandoned, then there are two main ways to terminate the tenancy so that the property can be relet.

The first is eviction, using either Section 8 or Section 21 eviction notices. If you are able to serve a Section 21 eviction notice (that is, you are approaching the end of the fixed term or the tenancy is now periodic), then it’s sensible to do this as soon as you can.

Once a property is abandoned, the tenant is no longer paying the rent, and therefore the landlord is usually able to serve a section 8 eviction notice on the grounds of non-payment of rent. There may be other terms of the tenancy broken, too, such as the common tenancy term around not leaving the property vacant for longer than 2 weeks without notifying the landlord in writing.

The second way is via implied surrender (also called ‘operation of law’), as described above. The tenant and landlord must act in a way that shows they both view the tenancy to be over. If the tenant has left the property and is no longer paying rent, and the landlord has, e.g. regained possession, changed the locks and relet the property and is no longer pursuing rent from the first tenant, then this demonstrates that they believe the tenancy has ended.

What’s important here is that the landlord’s actions are incompatible with them also believing the old tenancy to be in progress.

With either eviction or implied surrender, it is again crucial for the landlord to avoid appearing to harass or unlawfully evict the tenant. So before changing the locks or reletting the property, it is essential for the landlord to ensure that they have made every effort to contact the tenant and satisfied themselves fully that the tenant’s actions are incompatible with the continuation of the tenancy.

Summary

Disputes over surrenders are rare and the vast majority of tenancies can be brought to a close either using the terms of the contract or by mutual agreement.

If ever need to end a tenancy early by surrendering the contract, we hope this article will help you avoid any serious issues!

In every case, this article refers to Assured Shorthold Tenancies created under the Housing Act 1988 in England and Wales. Different rules could apply for other types of agreement.

This article is not intended to provide advice about what you should do in a particular situation. If you need to surrender a tenancy and are unsure of next steps, we always recommend taking independent legal advice.